Oceaneering Reports Fourth Quarter and Annual Earnings
-- Achieves Annual EPS of $3.40, Second Highest in Oceaneering's History
-- Reaffirms 2010 EPS Guidance of $3.25 to $3.55
HOUSTON, Feb. 17 /PRNewswire-FirstCall/ -- Oceaneering International, Inc. (NYSE: OII) today reported fourth quarter and annual earnings for the periods ended December 31, 2009.
For the fourth quarter of 2009, on revenue of $452.3 million, Oceaneering generated net income of $46.1 million, or $0.83 per share. During the corresponding period in 2008, Oceaneering reported revenue of $525.7 million and net income of $51.0 million, or $0.92 per share. For the year 2009, Oceaneering reported net income of $188.4 million, or $3.40 per share, on revenue of $1.8 billion. Net income for 2008 was $199.4 million, or $3.56 per share, on revenue of nearly $2.0 billion.
Summary of Results
(in thousands, except per share amounts)
Three months ended Year Ended
------------------ ----------
December 31, Sept. 30, December 31,
------------ --------- ------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Revenue $452,262 $525,691 $484,036 $1,822,081 $1,977,421
Gross Margin 107,734 120,248 114,045 437,726 464,800
Operating Income 72,132 81,626 76,306 292,116 317,558
Net Income $46,058 $51,009 $49,839 $188,353 $199,386
Net Income
Attributable to
Diluted Common
Shares * $45,737 $50,465 $49,491 $187,035 $197,284
Weighted Average
Number of Diluted
Common Shares * 55,095 54,726 55,058 55,026 55,374
Diluted Earnings Per
Share * $0.83 $0.92 $0.90 $3.40 $3.56
* 2008 period amounts have been restated to comply with current accounting
rules.
Annual and quarterly net income declined from 2008 as a result of lower operating income performances from Subsea Products, Subsea Projects, and Inspection. ROV operating income performances were record highs for both periods.
Results for the fourth quarter of 2009 included, in Mobile Offshore Production Systems (MOPS) gross margin, a $1.9 million gain on the sale of the Ocean Producer, a recently retired floating production storage and offloading unit. MOPS results in the fourth quarter of 2008 included a $5.7 million impairment charge to reduce our investment in the Ocean Pensador, an oil tanker that was sold in the second quarter of 2009.
T. Jay Collins, President and Chief Executive Officer, stated, "Our earnings of over $188 million were the second highest in Oceaneering's history and EPS of $3.40 was only 4% below last year's record results. This was a remarkable accomplishment and particularly gratifying during a time of global economic recession, tight credit markets, and declining oil consumption. Our performance in this environment was largely attributable to increased demand for ROV drill support services and the success of our efforts to control expenses, which enabled us to maintain the operating income margin we realized in 2008.
"We achieved record ROV operating income performance for the sixth consecutive year. Year over year, we grew ROV operating income by increasing our vehicle days on hire and controlling our expenses. During 2009 we put 30 new ROVs into service and retired nine. At year-end we had 248 vehicles in our fleet.
"Compared to 2008, Subsea Products operating income decreased due to demand declines for our specialty subsea products, lower umbilical plant throughput, and unanticipated manufacturing costs we incurred on two BOP control systems. Subsea Projects profit declined due to lower demand for our shallow-water vessel and diving services and competitive pressure in our deepwater vessel market due to an increase in industry vessel availability. Inspection results decreased due to the unfavorable currency impact of a stronger U.S. Dollar relative to the British Pound and lower demand for services.
"In 2009 we continued to take actions to position the company for future growth and increased earnings. Our capital expenditures were $175 million, of which $147 million was spent on growing and upgrading our ROV operations.
"Our balance sheet remained in great shape at year end. We had $162 million of cash, $120 million of debt, $200 million available under our revolving credit facility, and $1.2 billion of equity.
"For 2010 the International Energy Agency forecasts a global surplus supply of oil due to a reduction in demand stemming from the 2009 global economic recession. We therefore anticipate some deepwater construction projects will continue to be deferred until there is a meaningful recovery in hydrocarbon demand. We believe, however, that deepwater drilling activity will keep growing in 2010 as new floating rigs currently under construction are added to the worldwide fleet.
"We are forecasting our 2010 EPS to be relatively flat with 2009, in the range of $3.25 to $3.55. Compared to 2009, our forecast assumptions include unit volume growth and increased operating profit from ROVs, improved operating efficiencies and results for Subsea Products, declines in Subsea Projects activity levels and operating income, and a lower contribution from MOPS, due primarily to the retirement and sale of the Ocean Producer. For the first quarter of 2010, we are forecasting EPS of $0.65 to $0.75.
"For 2010 we anticipate generating in excess of $300 million of cash flow, simply defined as net income plus depreciation and amortization. This projected cash flow will provide ample resources to invest in Oceaneering's growth.
"Looking longer term, our belief that the oil and gas industry will continue to invest in deepwater to counteract high existing reservoir depletion rates remains unchanged. Deepwater is one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low per barrel finding and development costs. Therefore, we anticipate demand for our deepwater services and products will remain promising. With our existing assets, we are well positioned to supply a wide range of the services and products required to support the deepwater exploration, development, and production efforts of our customers."
Statements in this press release that express a belief, expectation, or intention are forward looking. The forward-looking statements in this press release include the statements concerning Oceaneering's: anticipation that some deepwater construction projects will continue to be deferred until there is a meaningful recovery in hydrocarbon demand; belief that deepwater drilling activity will keep growing in 2010 as new floating rigs under construction are added to the worldwide fleet; 2010 EPS guidance range of $3.25 to $3.55; 2010 forecast assumptions, including that it will achieve unit volume growth and increased operating profits from ROVs, improved operating efficiencies and results in Subsea Products, declines in Subsea Projects activity levels and operating income, and a lower contribution from MOPS due primarily to the retirement and sale of the Ocean Producer; first quarter 2010 forecasted EPS range of $0.65 to $0.75; anticipation of generating, during 2010, in excess of $300 million of cash flow, as defined, and the expectation that this cash flow will provide ample resources to invest in the company's growth; belief that the oil and gas industry, over the long term, will continue to increase its investment in deepwater to counteract high existing reservoir depletion rates; anticipation that demand for its deepwater services and products will remain promising; and forecasted EBITDA for 2010 and the related reconciliations thereof to forecasted net income. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current information and expectations of Oceaneering that involve a number of risks, uncertainties, and assumptions. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: industry conditions; prices of crude oil and natural gas; Oceaneering's ability to obtain, and the timing of, new projects; changes in customers' operational plans or schedules; contract cancellations or modifications; difficulties executing under contracts; and changes in competitive factors. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. For a more complete discussion of these and other risk factors, please see Oceaneering's annual report on Form 10-K for the year ended December 31, 2008 and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.
Oceaneering is a global oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications. Through the use of its applied technology expertise, Oceaneering also serves the defense and aerospace industries.
For further information, please contact Jack Jurkoshek, Director Investor Relations, Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; Fax 713-329-4653; E-Mail [email protected]. A live webcast of the Company's earnings release conference call, scheduled for Thursday, February 18, 2010 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, 2009 Dec. 31, 2008
------------- -------------
(in thousands)
ASSETS
Current Assets (including cash and cash
equivalents of $162,351 and $11,200) $ 874,139 $ 747,705
Net Property and Equipment 766,361 697,430
Other Assets 239,787 224,885
------- -------
TOTAL ASSETS $1,880,287 $1,670,020
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 388,547 $ 357,327
Long-term Debt 120,000 229,000
Other Long-term Liabilities 147,417 116,039
Shareholders' Equity 1,224,323 967,654
--------- -------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,880,287 $1,670,020
========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, Sept. 30, December 31,
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
(in thousands, except per share amounts)
Revenue $452,262 $525,691 $484,036 $1,822,081 $1,977,421
Cost of Services
and Products 344,528 405,443 369,991 1,384,355 1,512,621
------- ------- ------- --------- ---------
Gross Margin 107,734 120,248 114,045 437,726 464,800
Selling, General
and Administrative
Expense 35,602 38,622 37,739 145,610 147,242
------ ------ ------ ------- -------
Income from
Operations 72,132 81,626 76,306 292,116 317,558
Interest Income 181 395 287 694 907
Interest Expense (1,478) (3,603) (1,714) (7,781) (13,485)
Equity earnings of
unconsolidated
affiliates, net 825 22 768 3,242 1,919
Other Income
(Expense), net (800) 597 1,028 1,504 321
---- --- ----- ----- ---
Income before
income taxes 70,860 79,037 76,675 289,775 307,220
Provision for
Income Taxes 24,802 28,028 26,836 101,422 107,834
------ ------ ------ ------- -------
Net Income $ 46,058 $ 51,009 $ 49,839 $ 188,353 $ 199,386
======== ======== ======== ========== ==========
Net Income
Attributable to
Diluted Common
Shares * $ 45,737 $ 50,465 $ 49,491 $ 187,035 $ 197,284
Weighted Average
Number of Diluted
Common Shares* 55,095 54,726 55,058 55,026 55,374
Diluted Earnings
per Share * $ 0.83 $ 0.92 $ 0.90 $ 3.40 $ 3.56
* 2008 period amounts have been restated to comply with current accounting
rules.
The above Condensed Consolidated Balance Sheets and Condensed
Consolidated Statements of Income should be read in conjunction with the
Company's latest Annual Report on Form 10-K and Quarterly Report on Form
10-Q.
SEGMENT INFORMATION
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, Sept. 30, December 31,
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
($ in thousands)
Remotely Operated
Vehicles
Revenue $167,580 $160,253 $166,010 $ 649,228 $ 625,921
Gross margin $ 63,293 $ 60,809 $ 61,694 $ 237,023 $ 221,270
Operating income $ 55,158 $ 52,891 $ 53,994 $ 207,683 $ 190,343
Operating margin % 33% 33% 33% 32% 30%
Days available 22,724 20,649 22,011 86,527 79,052
Utilization 78% 82% 79% 79% 82%
Subsea Products
Revenue $124,467 $171,129 $132,748 $ 487,726 $ 649,857
Gross margin $ 28,331 $ 35,356 $ 27,798 $ 115,056 $ 146,747
Operating income $ 15,093 $ 22,189 $ 14,054 $ 60,526 $ 96,046
Operating margin % 12% 13% 11% 12% 15%
Backlog at end
of period $321,000 $298,000 $328,000 $ 321,000 $ 298,000
Subsea Projects
Revenue $ 48,627 $ 90,312 $ 65,861 $ 241,393 $ 256,517
Gross margin $ 13,396 $ 26,735 $ 19,274 $ 74,564 $ 81,534
Operating income $ 11,967 $ 24,034 $ 17,128 $ 66,514 $ 72,816
Operating margin % 25% 27% 26% 28% 28%
Inspection
Revenue $ 53,739 $ 56,253 $ 57,582 $ 216,140 $ 249,109
Gross margin $ 8,853 $ 10,275 $ 11,208 $ 41,125 $ 48,518
Operating income $ 5,569 $ 5,973 $ 7,296 $ 26,443 $ 31,017
Operating margin % 10% 11% 13% 12% 12%
Mobile Offshore
Production Systems
Revenue $ 5,067 $ 9,389 $ 9,960 $ 33,214 $ 39,274
Gross margin $ 3,207 $ (2,049) $ 2,726 $ 10,093 $ 8,361
Operating income
(loss) $ 3,114 $ (2,418) $ 2,355 $ 8,890 $ 6,730
Operating margin % 61% -26% 24% 27% 17%
Advanced Technologies
Revenue $ 52,782 $ 38,355 $ 51,875 $ 194,380 $ 156,743
Gross margin $ 5,698 $ 4,433 $ 7,713 $ 25,128 $ 21,596
Operating income $ 1,988 $ 1,450 $ 4,375 $ 12,366 $ 9,773
Operating margin % 4% 4% 8% 6% 6%
Unallocated Expenses
Gross margin $(15,044) $(15,311) $(16,368) $ (65,263)$ (63,226)
Operating income $(20,757) $(22,493) $(22,896) $ (90,306)$ (89,167)
TOTAL
Revenue $452,262 $525,691 $484,036 $1,822,081 $1,977,421
Gross margin $107,734 $120,248 $114,045 $ 437,726 $ 464,800
Operating income $ 72,132 $ 81,626 $ 76,306 $ 292,116 $ 317,558
Operating margin % 16% 16% 16% 16% 16%
SELECTED CASH FLOW INFORMATION
Capital expenditures,
including acquisitions $ 29,970 $ 53,850 $ 54,953 $ 175,021 $ 252,277
Depreciation and
amortization $ 33,433 $ 33,022 $ 31,798 $ 122,945 $ 115,029
The above should be read in conjunction with the Company's latest Annual
Report on Form 10-K and Quarterly Report on Form 10-Q.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, Sept. 30, December 31,
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
(in thousands)
Net Income $ 46,058 $ 51,009 $ 49,839 $188,353 $199,386
Depreciation and
Amortization 33,433 33,022 31,798 122,945 115,029
------ ------ ------ ------- -------
Subtotal 79,491 84,031 81,637 311,298 314,415
Interest Income/
Expense, Net 1,297 3,208 1,427 7,087 12,578
Provision for
Income Taxes 24,802 28,028 26,836 101,422 107,834
------ ------ ------ ------- -------
EBITDA $105,590 $115,267 $109,900 $419,807 $434,827
======== ======== ======== ======== ========
2010 Estimates
--------------
Low High
--- ----
(in thousands)
Net Income $180,000 $195,000
Depreciation and
Amortization 135,000 145,000
------- -------
Subtotal 315,000 340,000
Interest Income/
Expense, Net 5,000 5,000
Provision for
Income Taxes 95,000 105,000
------ -------
EBITDA $415,000 $450,000
======== ========
SOURCE Oceaneering International, Inc.
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